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WCE Holdings Berhad: Explosive Revenue Growth Signals a New Era for the West Coast Expressway
WCE Holdings Berhad, the operator of the much-anticipated West Coast Expressway (WCE), has just released its financial results for the first quarter ended June 30, 2025 (1Q FY2026). The report reveals a compelling story of phenomenal top-line growth as more sections of the expressway open to traffic. While revenue is surging, the bottom line reflects the heavy investment phase of this massive infrastructure project. Let’s dive deep into the numbers and what they mean for the company’s road ahead.
The standout figure from this quarter is the incredible 421% year-on-year surge in revenue, a clear testament to the company’s expanding operations and growing traffic volumes.
Core Financials: A Tale of Two Stories
At first glance, the financial statement presents a fascinating contrast. On one hand, we see explosive growth in revenue and operating profit. On the other, the company remains in a loss-making position due to significant financing costs—a typical scenario for a company building a major long-term asset like an expressway.
Quarter Ended 30/06/2025
Revenue: RM 393.8 million
Gross Profit: RM 24.9 million
Loss Before Tax: (RM 34.6 million)
Loss Per Share: (0.82 sen)
Quarter Ended 30/06/2024
Revenue: RM 75.6 million
Gross Profit: RM 13.8 million
Loss Before Tax: (RM 34.6 million)
Loss Per Share: (0.87 sen)
The key takeaway here is that while revenue skyrocketed, the Loss Before Tax remained stable. Why? The primary reason is the increase in finance costs, which rose to RM 58.3 million from RM 48.8 million last year. As new sections of the expressway are completed and become operational, the interest costs associated with their construction loans can no longer be capitalized (added to the asset value). Instead, they are expensed directly in the profit and loss statement, putting pressure on the bottom line. This is an expected accounting treatment for such projects in their initial operational years.
Unpacking the Performance by Segment
To truly understand the growth drivers, we need to look at the performance of WCE’s different business segments. The growth is broad-based, coming from both its toll and construction activities.
| Segment | Revenue (1Q FY2026) | Revenue (1Q FY2025) | Growth | Key Drivers |
|---|---|---|---|---|
| Concession – Construction | RM 318.3 million | RM 39.3 million | 710% | Higher construction activity for Rest and Service Areas (RSAs) and remaining expressway sections. |
| Concession – Toll Collection | RM 42.0 million | RM 26.1 million | 61% | Increased traffic volume following the opening of new sections (Sections 1, 2, and 11). |
| Construction | RM 33.6 million | RM 10.2 million | 230% | Higher level of construction activity during the period. This segment also returned to profitability. |
The surge in toll collection is particularly encouraging. With 8 out of 11 sections now operational, the expressway is proving to be a vital artery for motorists. The company reported that average daily traffic grew by 36% quarter-on-quarter, hitting a new record daily toll collection of RM0.9 million during the Hari Raya Puasa period in April 2025.
The Road Ahead: Opportunities and Hurdles
WCE is at a pivotal point in its journey. The operational ramp-up is well underway, but the path to profitability has its challenges.
Opportunities on the Horizon
- Maturing Traffic Flow: As more sections open and motorists become familiar with the WCE, traffic volumes are expected to continue their upward trajectory. The full alignment will connect Banting in Selangor to Taiping in Perak, offering a crucial alternative to the North-South Expressway.
- Long-Term Profitability: The business model is designed for long-term gains. As toll revenue grows, it is expected to eventually outpace financing costs, leading the Group towards sustained profitability.
- Healthy Construction Arm: The construction segment, WCE Maju Sdn Bhd, is actively working on projects with a total contract sum of approximately RM800 million, ensuring a steady stream of revenue.
Hurdles to Navigate
- High Financing Costs: As explained, this will continue to weigh on net profit in the near term. Managing this debt effectively is the company’s primary financial challenge.
- Project Completion: The final three sections (Sections 3, 4, and 7) are still under construction. Timely completion is crucial to realizing the full potential of the expressway network.
Summary and Investment Recommendations
This quarter’s report for WCE Holdings Berhad showcases a company in a dynamic growth phase. The phenomenal revenue increase, driven by both construction progress and rapidly growing toll collections, underscores the strategic importance of the West Coast Expressway. While accounting losses are expected in these early years due to high, non-capitalized financing costs, the underlying operational performance is strengthening. The significant improvement in operating cash flow from a negative RM57.9 million last year to a positive RM171.6 million this year is a powerful indicator of the business’s fundamental health and its potential to generate sustainable cash in the future.
Key takeaways from this report include:
- Massive Revenue Growth: An undeniable sign that the company’s core asset is beginning to deliver on its promise, with both construction and tolling operations firing on all cylinders.
- Short-term Profitability Pressure: High financing costs for completed highway sections are impacting the net profit, an expected and temporary trend in the initial operational phase of a major infrastructure project.
- Improving Traffic Volume: The newly opened sections are successfully attracting a growing number of users, indicating strong future toll revenue potential and user acceptance.
- Strong Operating Cash Flow: The business is now generating healthy cash from its core operations, which is crucial for funding ongoing work, servicing debt, and achieving long-term sustainability.
From a professional standpoint, this report paints a picture of a company in a critical transition. The explosive revenue growth and positive operating cash flow are strong indicators of the West Coast Expressway’s potential. However, interested parties should closely monitor the company’s ability to manage its significant debt and navigate this period of accounting losses until traffic volumes mature sufficiently to cover all costs.
What are your thoughts on WCE’s strategy? Do you believe the rising traffic volumes will lead to profitability sooner than expected? Share your views in the comments below!
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